United States District Court, D. New Jersey
December 27, 2005.
THE IQ GROUP, LTD. d/b/a INSURANCE IQ, Plaintiff,
WIESNER PUBLISHING, LLC t/a ADVISORS DATA SOURCE and t/a IT BUYERS, and LISA HULAC; ERIC BENDER; NATIONAL SENIOR ASSOCIATES COMPANY, LLC; CAPITAL CARE, INC.; and JOHN DOES 1-1000, Defendants.
The opinion of the court was delivered by: JOSEPH GREENAWAY JR., District Judge
This matter comes before the Court on the Motion for Summary
Judgment by Defendant National Senior Associates Company, LLC
("NSAC") and the Cross-Motion for Summary Judgment by Plaintiff
IQ Group, Ltd. ("IQ"), pursuant to FED. R. CIV. P. 56. For the
reasons set forth below, all motions and cross-motions for
summary judgment shall be denied.
These motions arise in the context of a dispute between
business competitors. IQ and Wiesner Publishing, LLC ("Wiesner")
are businesses that provide advertising services for insurance
companies: they send ads by email to insurance agents. In 2003,
National Senior Associates Company, LLC ("NSAC") and Capital
Care, Inc. ("Capital Care"), insurance companies, both hired IQ to send advertisements. NSAC and IQ
dispute who created the NSAC ad, and thereby who is entitled to
claim authorship and hold the copyright. IQ distributed copies of
the Capital Care and NSAC ads via email to insurance agents; the
ads sent by IQ displayed a graphic described by IQ as a logo. The
IQ logo consists of the outline of a capital "Q" with the outline
of a lower-case "I" in the center. Both outlines are shaded, as
if in graphical relief. The ads also contained a hyperlink that,
when clicked, directed the user to a page of IQ's website which
IQ claims contained copyright notices.
After IQ had distributed the NSAC and Capital Care ads, both
NSAC and Capital Care hired Wiesner to distribute the ads via
email. Both NSAC and Capital Care provided Wiesner with the ads
that IQ distributed. Wiesner removed the IQ logo and hyperlink,
added new information so that responses to the ads would go to
NSAC and Capital Care, and then copied and distributed the ads
IQ subsequently applied to the U.S. Copyright Office for
copyright registration, claiming authorship of the NSAC and
Capital Care ads. IQ obtained copyright registrations as of
October 22, 2003. IQ then filed suit against Wiesner, NSAC,
Capital Care and other parties, claiming copyright infringement,
violations of the Digital Millennium Copyright Act ("DMCA"), and
breach of contract by NSAC, which is alleged to have used IQ's
artwork without permission.
NSAC filed a motion for summary judgment on these issues: 1)
The court lacks subject-matter jurisdiction over the copyright
infringement claims because of fatal defects in pleading; 2) the
copyright registration for the NSAC ad is invalid; and 3) IQ
cannot prevail on its breach of contract claim. IQ filed a
cross-motion for summary judgment on these issues: 1) NSAC has
infringed IQ's copyright on the NSAC ad; 2) IQ is entitled to
increased statutory damages for NSAC's allegedly willful infringement of the copyright on the
NSAC ad; and 3) NSAC violated the DMCA, 17 U.S.C. § 1202, with
regard to the NSAC ads.
I. Governing Legal Standards
A. Standard for a Rule 56 Motion for Summary Judgment
Summary judgment is appropriate under FED. R. CIV. P. 56(c)
when the moving party demonstrates that there is no genuine issue
of material fact and the evidence establishes the moving party's
entitlement to judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986); Orson, Inc. v. Miramax
Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996). In making this
determination, the Court must draw all reasonable inferences in
favor of the non-movant. Hullett v. Towers, Perrin, Forster &
Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994); Nat'l State Bank
v. Fed. Reserve Bank of N.Y., 979 F.2d 1579, 1581 (3d Cir.
Once the moving party has satisfied its initial burden, the
party opposing the motion must establish that a genuine issue as
to a material fact exists. Jersey Cent. Power & Light Co. v.
Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). The party
opposing the motion for summary judgment cannot rest on mere
allegations and instead must present actual evidence that creates
a genuine issue as to a material fact for trial. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Siegel Transfer,
Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir.
1995). "[U]nsupported allegations . . . and pleadings are
insufficient to repel summary judgment." Schoch v. First Fid.
Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also
FED. R. CIV. P. 56(e) (requiring nonmoving party to "set forth
specific facts showing that there is a genuine issue for trial"). If the nonmoving party has failed "to make a showing sufficient
to establish the existence of an element essential to that
party's case, and on which that party will bear the burden of
proof at trial, . . . there can be `no genuine issue of material
fact,' since a complete failure of proof concerning an essential
element of the nonmoving party's case necessarily renders all
other facts immaterial." Katz v. Aetna Cas. & Sur. Co.,
972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,
477 U.S. at 322-23). In determining whether there are any issues of material
fact, the Court must resolve all doubts as to the existence of a
material fact against the moving party and draw all reasonable
inferences including on issues of credibility in favor of the
non-moving party. Watts v. Univ. of Del., 622 F.2d 47, 50 (3d
II. Defendant's Motion for Summary Judgment
A. Subject Matter Jurisdiction as to the Copyright Claims
NSAC argues that, under 17 U.S.C. § 411, this Court lacks
subject matter jurisdiction on the copyright claims because the
copyright registration numbers at issue were not specified in the
Complaint, nor has the Complaint been amended to specify them.
This argument fails on both legal and equitable grounds.
NSAC argues that the copyright registration numbers were not
specified in the Complaint, but 17 U.S.C. § 411(a) does not
require that registration numbers be specified in the Complaint.
Nor has NSAC offered controlling authority in support of its
position. NSAC thus asks this Court to take drastic action
throwing out IQ's infringement actions in the absence of
statutory or case law authority establishing the asserted
technical requirements for the Complaint.
Furthermore, as the parties both observe, the Fifth Circuit has
held that, to satisfy the jurisdictional prerequisites of § 411,
"[o]ne need only prove payment of the required fee, deposit of the work in question, and receipt by the Copyright Office of a
registration application." Apple Barrel Productions, Inc. v.
Beard, 730 F.2d 384, 386-387 (5th Cir. 1984). NSAC has not
argued that IQ has failed to meet these requirements.
Moreover, agreeing to NSAC's argument would create an
injustice. Although NSAC does state in one sentence that it has
been prejudiced, it gives no explanation of how it has been
prejudiced because registration numbers are not in the Complaint,
nor does this Court observe how it has been. Despite its
assertion of prejudice, NSAC then proceeds to argue in detail
that the copyright registration and supplementary registration
are invalid. The arguments exhibit a detailed knowledge of every
aspect of these registrations. It does not appear that NSAC lacks
any information about the registrations that has impaired its
Although the equitable powers of the federal court do not
extend to granting subject matter jurisdiction absent statutory
authority, there is no question that this court has subject
matter jurisdiction over copyright infringement cases. This Court
has the equitable power to disregard defects in pleading. "The
reach of a federal district court's inherent equitable powers is
broad indeed." Bivens v. Six Unknown Named Agents of Federal
Bureau of Narcotics, 403 U.S. 388, 404 (U.S. 1971) (internal
citations omitted). The Supreme Court has held that the scope of
this reach is historically determined. Id. Federal Equity Rule
19 (1912) stated: "The court may at any time, in furtherance of
justice, upon such terms as may be just, permit any process,
proceeding, pleading, or record to be amended, or material
supplemental matter to be set forth in an amended or supplemental
pleading. The court, at every stage of the proceeding, must
disregard any error or defect in the proceeding which does not
affect the substantial rights of the parties." The second
sentence is now contained in FED. R. CIV. P. 61. NSAC has not convinced this Court that any error or defect has
occurred. But, even if it had, this Court must disregard such
error or defect if it does not affect NSAC's substantial rights.
NSAC has not argued that any error or defect has affected its
substantial rights, and so, even if there were such an error,
this Court would invoke its equitable powers to disregard it.
NSAC's motion for summary judgment on this question is denied.
B. Validity of IQ's Copyright Registration of the NSCA Ad
NSAC argues that Alan Mott authored the NSAC ad, and that IQ's
copyright registration is invalid because it failed to disclose
the true author. IQ argues that IQ employees Eileen Foley and
Vincent Bono created the ad. Each side has offered supporting
affidavits from the persons claiming authorship.
Authorship forms the foundation of copyright. As the Supreme
Court stated, "The Copyright Act of 1976 provides that copyright
ownership `vests initially in the author or authors of the work.'
17 U.S.C. § 201(a). As a general rule, the author is the party
who actually creates the work, that is, the person who translates
an idea into a fixed, tangible expression entitled to copyright
protection." Cmty. for Creative Non-Violence v. Reid,
490 U.S. 730, 737 (1989).
The parties dispute the authorship of the NSAC ad, and each
side has submitted evidence to support its claim. This creates a
genuine issue as to the material fact of authorship; neither side
has shown the nonexistence of this issue. As a result, this issue
is not amenable to resolution on summary judgment.
NSAC's motion for summary judgment on this question is denied.
C. Breach of Contract Claim for Use of Original Artwork in the
NSAC seeks summary judgment on IQ's claim for breach of
contract, which alleges that NSAC used IQ's artwork without IQ's permission, in violation of
provision 9 of their contract. NSAC argues that, because IQ did
not author or create any artwork, NSAC could not have made use of
original advertising artwork without IQ's permission, in
violation of the contract. IQ claims that its employees created
the artwork. Determination of this issue relies on the question
of authorship already stated: who created the artwork in the NSAC
ad? As discussed above, this issue is not amenable to resolution
on summary judgment.
NSAC's motion for summary judgment on this question is denied.
III. Plaintiff's Cross-Motion for Summary Judgment
A. Plaintiff's Motions Regarding Copyright Infringement Under
the Copyright Act
Plaintiff moved for summary judgment as to infringement of the
copyright on the NSAC ad, and as to its entitlement to statutory
damages for willful infringement of this copyright. The issue of
entitlement to statutory damages requires, as a predicate, a
determination of copyright infringement. "The elements of a
copyright infringement action are (1) ownership of a valid
copyright and (2) copying by the alleged infringer." Masquerade
Novelty v. Unique Indus., 912 F.2d 663, 667 (3d Cir. 1990).
As discussed above, the parties dispute the authorship of the
NSAC ad, and have demonstrated the existence of a genuine issue
as to a material fact; this issue cannot be resolved on summary
judgment. As determination of authorship is necessary to
determine whether IQ's copyright is valid, and, in turn,
determination of copyright validity is necessary to establish
infringement, and then to determine damages for willful
infringement, none of these issues is amenable to resolution on
Plaintiff's motion for summary judgment as to infringement of
the copyright on the NSAC ad, and as to its entitlement to statutory damages for
willful infringement of this copyright, is denied.
B. Plaintiff's Motion Regarding Violations under the DMCA
Plaintiff has filed a cross-motion for summary judgment
alleging that NSAC has violated 17 U.S.C. § 1202. NSAC argues
that IQ cannot make this motion because the Complaint does not
assert that NSAC violated the DMCA. IQ points to ¶ 9 of the
Complaint, which does allege that NSAC conspired with other
defendants to violate the DMCA. The Complaint's demand for
relief, as to the DMCA, refers generally to "Defendants," which
NSAC's argument as to the procedural impropriety of this motion
is not persuasive. The Federal Rules of Civil Procedure do not
set elaborate requirements for a complaint. FED. R. CIV. P. 8(a).
Moreover, Rule 8(f) instructs that "[a]ll pleadings shall be
construed so as to do substantial justice." FED. R. CIV. P. 8(f).
"The Federal Rules reject the approach that pleading is a game of
skill in which one misstep by counsel may be decisive to the
outcome and accept the principle that the purpose of pleading is
to facilitate a proper decision on the merits." Conley v.
Gibson, 355 U.S. 41, 48 (1957). This Court does not find the
Complaint so deficient as to render IQ's motion for summary
judgment procedurally improper.
This Court has construed 17 U.S.C. § 1202 in relation to this
case, as explained in the companion opinion on the summary
judgment motions concerning IQ and Defendant Wiesner Publishing,
LLC. Under this construction, because the information removed
from the NSAC ad did not function as a component of an automated
copyright protection system, it does not fall within the
definition of "copyright management information" in
17 U.S.C. § 1202(c). NSAC has not violated any part of 17 U.S.C. § 1202.
Plaintiff's motion for summary judgment on this question is denied.
For the foregoing reasons, this Court denies NSAC's motions for
summary judgment on the issues of subject matter jurisdiction
over the copyright infringement claims, invalidity of the
copyright registration for the NSAC ad, and the breach of
contract claim. This Court denies Plaintiff's cross-motion for
summary judgment on the issues of NSAC's infringement of IQ's
copyright on the NSAC ad, IQ's entitlement to increased statutory
damages for NSAC's allegedly willful infringement of the
copyright on the NSAC ad, and NSAC's violation of the DMCA,
17 U.S.C. § 1202, with regard to the NSAC ads.
© 1992-2006 VersusLaw Inc.